Challenging affordability conditions remain a burden for the housing business, but the sector may experience lower interest rates in the near future, with the Federal Reserve predicted to drop short-term interest rates this afternoon.
Overall housing starts fell 8.5% in August to a seasonally adjusted annual pace of 1.31 million units, according to a data from the U.S. Department of Housing and Urban Development, and the United States The Census Bureau.
The August reading of 1.31 million starts represents the amount of dwelling units built if development continued at this rate for the next 12 months.
Within this overall figure, single-family starts fell 7% to 890,000 seasonally adjusted annual rate, and are down 4.9% year to date. This is the lowest reading for single-family home building since July 2024.
The multifamily sector, which includes apartment complexes and condos, fell 11.7% to an average 417,000 units. While apartment construction in greater population metropolitan centers has decreased in 2025, the apartment development industry has remained strong in lower density locales, including certain exurban locations, according to NAHB Home Building Geography Index data.
With the Fed projected to drop the federal funds rate later today, the return to monetary policy easing will indirectly benefit the mortgage market by lowering interest rates for construction and land development loans, allowing builders to increase housing production.
According to the September NAHB/Wells Fargo Housing Market Index (HMI), builders indicated a rise in future market expectations, despite mortgage rates falling slightly in recent weeks.
On a regional and year-to-date basis, single-family and multifamily starts were 8.3% higher in the Northeast, 15% higher in the Midwest, 3.5% lower in the South, and 0.1% higher in the West.
In August, overall permits fell 3.7% to 1.31 million units at an annualized rate.
Single-family permits fell 2.2% to 856,000 units, marking a 7% fall year to date. Multifamily permits dropped 6.4% to 456,000.
Looking at year-to-date regional permit data, permits were 16.3% lower in the Northeast, 6.2% higher in the Midwest, 5.6% lower in the South, and 5.2% lower in the West.
The slowdown of single-family house starts in 2025 has had a significant impact on the number of single-family homes under construction.
As of August, there were 611,000 single-family homes under construction, a 4.8% decrease from the previous year.
Because of decreases in multifamily development starts in 2024, the number of apartments under construction fell 20% to 706,000 units in August.
[Read more about this topic on Eyeonhousing.org]